Breaking barriers for future growth

In 2018, the Vietnamese economy grew by an impressive rate of 7.08 per cent, fuelled by the strong direction of the government, with a rise in foreign investment. Minister of Planning and Investment Nguyen Chi Dung talked with VIR’s Tung Huong about the year’s economic achievements, and the country’s new investment attraction strategy.

Minister of Planning and Investment Nguyen Chi Dung

What was the Vietnamese economic picture like for 2018, moving into this year?

We have greatly succeeded in maintaining the macroeconomic situation, with the economy keeping its comprehensive growth speed. The economy has been supported by many impetuses, with inflation controlled and its macro-balances ensured. This success has been made by all sectors in the economy, especially the concerted actions by the ministries of Planning and Investment, Finance, and Industry and Trade, and the State Bank of Vietnam. Accordingly, all solutions for implementing monetary and fiscal policies, and other macro-policies have been effectively carried out.

Thanks to macroeconomic stability, the economic picture in 2018 was bright. Specifically, the economy grew by 7.08 per cent, which is quite high. Notably, comprehensive growth could be seen in all sectors with the agricultural, and manufacturing and processing sectors remaining the key drivers, which have created visible changes in the economy’s structure and growth model.

In addition to the consumer price index controlled at an on-year rise of 3.54 per cent, many macro-indexes such as public debt (down to 61.4 per cent), foreign exchange, the lending rate, banking liquidity and safety, credit growth, and foreign reserves have also been ensured at very positive levels.

The local investment and business climate has continued to significantly improve, with over 130,000 newly-established enterprises, and disbursement of foreign direct investment (FDI) for 2018 hitting $19.1 billion, up 9.1 per cent on-year.

Total development capital accounted for 33.5 per cent of the GDP, with the ratio of private investment on the rise.

Besides, the domestic and overseas markets have also developed strongly, with export turnover rising by 13.8 per cent on-year, and a record trade surplus of $7.2 billion. Total retail and consumption service revenue climbed by 11.7 per cent on-year.

For 2019, many international organisations forecast that the global economy’s growth will slow down due to trade tensions, which will have negative impacts on the Vietnamese economy. However, we can still see big prospects for the country, especially in the sectors of trade and investment. We need to grab all opportunities from the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) right away.

Global FDI flows are expected to continue changing in 2019, with the Southeast Asian region and Vietnam remaining attractive investment destinations. The issue is that we need to make good preparations to take advantage of all opportunities, while selecting high-quality projects which are environmentally friendly and can be linked with Vietnamese enterprises.

The National Assembly has set a growth target of 6.6-6.8 per cent for 2019. What will be the key drivers to reach this goal?

Prime Minister Nguyen Xuan Phuc stated that 2019 is considered by the government to be a year of speeding up, and making big breakthroughs in all sectors of the economy. All efforts must be made to reach the highest results.

In 2019, Vietnam has to double down on its efforts so that all socioeconomic development goals set until 2020 can be hit successfully.

Party General Secretary, State President Nguyen Phu Trong has ordered that in 2019, growth must be higher than in 2018.

Much remains to be done not only in 2019, but also in the following years. Specifically, we must keep boosting administrative reforms, making it more convenient for businesses to enter the market effectively, while reducing costs for businesses to develop further. We have already been doing this job well over the past years, but this effort must be multiplied in the coming years.

Focus must be laid on developing private enterprises. They have been strongly developing in number and quality. Many big projects in Vietnam have seen the participation of the private sector.

However, they are now facing difficulties, and need a level playing field in the economy, with openness and transparency.

The resolution of the fifth meeting of the 12th Party Central Committee has stressed the development of the private sector into one of the important propellants of the socialist-oriented market-based economy. Thus, in 2019 focus must be placed on removing difficulties for private companies, so that they can strongly develop and make bigger contributions to the economy and become a stronger impetus for the country.

It is also necessary to boost scientific and technological renovation via sturdier policies and mechanisms.

Also, we need good preparations for international integration. After the CPTPP takes effect, the economy and the business community will need stronger capacity to take advantage of all opportunities. If we do well, the our economic growth can exceed the target of 6.8 per cent set by the National Assembly, laying good groundwork for the development of following years.

Achievements also come with ­difficulties. Can you highlight some of the obstacles our economy is facing in 2019?

The economy will experience ups and downs. It is expected that the global economy’s growth and the demand for goods and trade will slow down, especially from the US and China. This will have a negative impact on Vietnam.

Meanwhile, domestically, we are facing numerous issues, such as the economy’s small scale, low competitiveness, as well as climate change, natural calamities, and epidemics which have badly affected people’s lives. State resources remain limited, while it is still difficult to mobilise resources from the private sector.

In 2018, the country’s ­disbursed FDI reached $19.1 billion, up 9.1 per cent. What is the ­significance of this?

The FDI disbursement last year was positive. In the coming time, this capital will make bigger contributions to the economy. It can be said that obstacles to FDI have been removed, thus the disbursed FDI figure was quite high in 2018. It also reflects foreign investors’ growing confidence in the Vietnamese business and investment climate. I would stress that the disbursed sum is very significant.

After 30 years of attracting FDI, the Ministry of Planning and ­Investment has been compiling a new strategy for the coming years. What kinds of projects and partners will the focus be on?

Over the past three decades, FDI has become an important part of the economy, creating 27 per cent of the GDP, 70 per cent of export turnover, 17 per cent of state budget, and generating employment for about nine million local workers.

FDI has also helped Vietnam boost economic reforms and perfect the socialist-oriented market-based economy, while supporting the development of localities and domestic enterprises.

In the time to come, we will ­concentrate on luring FDI into the sectors of high-technology, new technology, IT, ICT, electronics, automobiles, agricultural machinery, industrial and electrical equipment, supporting industries, and research and development. The Internet of Things, Artificial Intelligence, virtual reality, cloud computing, digital economy, and automatisation are also very important.

Priorities will also be given to attracting FDI in the sectors of manufacturing and processing, high-tech agriculture, healthcare, education and training, high-quality tourism, finance, logistics, and clean, smart energy.

However, we will also continue to seek for FDI into the sectors that are of Vietnam’s advantage, such as garments and textiles, and footwear, with a focus on high-added value linked with automation and smart production.

In terms of markets and partners, we will continue diversifying the attraction of FDI from various markets and partners. We will effectively take full use of our ties with strategic partners, developed nations, and G7 nations in order to attract more investment from these countries into hi-tech projects which can have a spillover effect all over the economy.

We will continue to follow and assess FDI inflows into Vietnam to select projects that suit our country’s orientations. We will say no to projects using backward technologies which can harm the environment and people’s health.

We will also attract FDI from small- and medium-sized enterprises that have modern technology and can help domestic counterparts join global value chains, develop supporting industries, improve production capacity, and ­create more new employment.

Now is a good time for us to revise our policies and strategy on FDI ­attraction, as Vietnam is becoming a more attractive investment destination.